Amazon to set up first giant warehouse in Mumbai

San Francisco: Amazon.com Inc is setting up its first “fulfillment centre” in India as the world’s largest Internet retailer tries to break into the world’s second most-populous nation.

Fulfillment centres are giant warehouses that help Amazon and other online retailers store many products, ship them and handle returns quickly.

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The fulfillment centre is based in Mumbai, the biggest city in the country, according to job listings on Amazon’s India careers website.

Amazon “has an immediate opening for an IT Manager in our first Fulfillment Centre based out in Mumbai, India,” one recent listing said.

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Another recent Amazon job posting sought a “Stations Operations Manager” to work for the fulfillment centre team in Mumbai.

Amazon was also recently looking for a financial analyst in Mumbai to report to a general manager and controller and help the fulfillment center operate more efficiently and predictably.

Amazon spent heavily last year setting up more than 10 new fulfillment centers in the United States. The company also lists fulfillment centers in China, Germany, Japan and the UK on its website, but currently lists none in India.

Fulfillment centres cost a lot to set up, so Amazon’s efforts to start one in India signal the company is serious about getting into the country’s $550 billion retail market.

“While it has been speculated that Amazon would be expanding internationally, it seems that the international expansion plans have been accelerating,” said Ben Schachter, an analyst at Macquarie. “Last year, they launched a country-specific site in Spain and now it looks like India could be next.”

An Amazon spokeswoman did not respond to emails seeking comment on the company’s plans for India.

Amazon has software development centers in Bangalore, Chennai and Hyderabad and a customer-service center in Hyderabad.

Shoppers in India can also buy products from Amazon websites in other countries and have the items shipped to them. But the company does not have a dedicated online retail business in India yet.

That has allowed e-commerce start-ups, led by Flipkart, to expand quickly in India.

“India is a tremendously large potential market for Amazon,” said Mahesh Murthy, a venture capital investor in India and founder of digital marketing start-up Pinstorm.

“In fact, from the metrics we see, Amazon currently gets more traffic from India than Flipkart does, even though the former has no formal presence in India,” he added.

Amazon already does a lot of business in India through its UK website, amazon.co.uk, because the company offers free shipping and handles customs for all books, music and DVDs bought from that site and shipped to India, Murthy said.

“But this would be significantly smaller than what Amazon could do if it came with a full offering into India,” he added.

Marketplace approach

Restrictions on overseas investment in multi-brand retailers now effectively exclude giants such as Wal-Mart Stores Inc and Amazon from the Indian market.

However, Indian laws allow foreign companies to operate online marketplaces that bring together consumers and third-party merchants. Indeed, eBay Inc , the world’s largest online marketplace operator, is “very strong” in India, Murthy said.

Amazon is taking a similar approach as it enters India and has been wooing executives and a few merchants to join its own marketplace in the country, Murthy added. He declined to identify them because he said they likely agreed to keep discussions with Amazon confidential.

Mumbai delivery network

A lot of consumers in India still pay with cash, so online retailers such as Flipkart often have couriers deliver items and collect payments at the destination.

Amazon’s recent job listing for a Stations Operations Manager in Mumbai suggests the company is planning a delivery network of its own in the city.

The job involves identifying locations for “delivery stations,” managing a city-wide delivery team and “ensuring rapid growth in the delivery infrastructure throughout the city,” the listing said.

The position also involves setting up a process for transporting items from the Mumbai fulfillment center to delivery stations and getting products from those stations to customer addresses, according to the listing.

Reuters